Labour law in India is complex, multi-layered, and currently in the middle of a historic restructuring with the 4 New Labour Codes. This guide cuts through the confusion — giving HR professionals a clear, practical understanding of what laws apply, what has changed, and what actions to take right now.
India has historically had one of the most complex labour law frameworks in the world — over 40 central laws and hundreds of state-level laws governing different aspects of employment. Small businesses struggled to comply with laws they didn't even know existed. Large companies needed entire legal departments just to track obligations across states.
The Government of India has been consolidating these 40+ central laws into 4 comprehensive Labour Codes since 2019. As of 2026, the Codes are enacted but their implementation is phased — with most states in various stages of adopting the new framework.
This creates a challenging compliance environment: you must understand both the existing laws (which remain in effect until the new Codes are notified in your state) and the new framework. This guide covers both.
⚠️ Labour law compliance is not optional and ignorance is not a legal defence. HR professionals are personally responsible for ensuring their company meets all applicable obligations — making this knowledge a core competency, not a specialisation.
India's 40+ central labour laws are being consolidated into 4 Labour Codes — a historic restructuring that every HR professional needs to understand now.
Consolidates the Payment of Wages Act, Minimum Wages Act, Equal Remuneration Act, and Payment of Bonus Act. Key change: introduces a universal minimum wage applicable to all establishments (not just scheduled industries), and redefines "wages" to include all monetary compensation — with significant implications for PF and gratuity calculations.
✅ HR Action Required: Review wage structures to ensure all employees meet the new floor wage. Audit gender pay equity across comparable roles.
Consolidates the Industrial Disputes Act, Trade Unions Act, and Industrial Employment (Standing Orders) Act. The threshold for requiring government permission before layoffs or retrenchment is raised from 100 to 300 workers — giving smaller companies significantly more flexibility. Introduces a framework for fixed-term employment contracts with equal benefits as permanent employees.
✅ HR Action Required: Review standing orders if your establishment exceeds 300 workers. Understand the new fixed-term contract framework and its benefits implications.
Consolidates EPF, ESI, Gratuity, Maternity Benefit, Employee Compensation, and other social security laws. Most significant change: extends social security coverage to gig economy and platform workers for the first time. Also enables portability of PF accounts and allows employees to opt for higher PF contributions.
✅ HR Action Required: If your company engages gig or platform workers, assess your social security obligations under this Code. Review PF and ESI calculations for compliance with the new wage definition.
Consolidates 13 laws including the Factories Act, Mines Act, and Contract Labour Act. Standardises working hours at 8 hours per day / 48 hours per week with a maximum 12-hour daily limit including overtime. Mandates annual health check-ups for workers above a specified age. Introduces portability of service records through a national database.
✅ HR Action Required: Audit working hours practices. Ensure overtime compensation is correctly calculated and documented. Review welfare facilities against updated requirements for your industry.
Every establishment with 10 or more employees must constitute an Internal Complaints Committee (ICC). An external expert must be included. Annual awareness training is mandatory, and an annual compliance report must be submitted to the district officer. Non-compliance attracts a penalty of up to ₹50,000 for the first offence and up to ₹1 lakh (with possible licence cancellation) for repeat offences.
26 weeks of fully paid maternity leave for the first two children (12 weeks for third child or more). 12 weeks for adoptive and commissioning mothers adopting a child below 3 months. Mandatory crèche facility for establishments with 50 or more employees. Work-from-home option to be made available post maternity leave where the nature of work permits.
Payable to all employees completing 5 continuous years of service (or to their family in case of death). Formula: Last drawn Basic + DA × 15/26 × years of service. Maximum gratuity is ₹20 lakhs. Must be paid within 30 days of separation.
A state-specific law governing commercial establishments. Requirements vary by state but typically cover: registration, working hours, weekly off, holidays, leave entitlements, register maintenance, and notice display. All establishments must register — this is the most commonly missed compliance requirement for new businesses.
A state-level tax on employment. Applicable in Maharashtra, Karnataka, West Bengal, Andhra Pradesh, Telangana, Gujarat, and others. Rates, slabs, and deadlines vary by state. Employers are responsible for deducting PT from employee salaries and remitting to the state government.
Prohibits discrimination in pay, recruitment, or training on grounds of gender for the same or similar work. HR teams must conduct periodic pay equity audits and document justification for any pay differences between employees in comparable roles.
| Compliance Requirement | Due Date | Authority |
|---|---|---|
| PF remittance | 15th of following month | EPFO |
| ESI remittance | 15th of following month | ESIC |
| PF monthly return (ECR) | 25th of following month | EPFO |
| ESI half-yearly return | Nov 11 & May 12 | ESIC |
| TDS deposit (other than March) | 7th of following month | Income Tax Dept |
| TDS deposit for March | 30th April | Income Tax Dept |
| Quarterly TDS return (Form 24Q) | 31 Jul, 31 Oct, 31 Jan, 31 May | Income Tax Dept |
| Professional Tax (Maharashtra) | Last day of month | State Govt |
| POSH annual report | 31st January each year | District Officer |
| Gratuity payment | Within 30 days of separation | Employee |